Draft Carriage By Air Acts (Implementation of the Montreal Convention 1999) and (Application of Provisions) Order 2001

Seventh Standing Committee

on Delegated Legislation

Monday 3 December 2001

[Mr. Nigel Beard in the Chair]

Draft Carriage by Air Acts (Implementation of the Montreal Convention 1999)

Order 2001

4.30 pm

The Parliamentary Under-Secretary of State for Transport, Local Government and the Regions (Mr. David Jamieson): I beg to move,

That the Committee has considered the draft Carriage by Air Acts (Implementation of the Montreal Convention 1999) Order 2001.

The Chairman: With this it will be convenient to discuss the draft Carriage by Air Acts (Application of Provisions) Order 2001.

Mr. Jamieson: I welcome you to the Chair, Mr. Beard. Today is the first time that I have had the pleasure of sitting under your careful gaze in such a Committee. I am sure that we will all enjoy your chairmanship.

The draft orders are closely linked and have two main aims. First, they pave the way for the United Kingdom to ratify the 1999 Montreal convention. Secondly, they apply certain provisions of that convention for the purposes of domestic air carriage in the United Kingdom.

The convention is the international agreement that establishes an updated basis for the liability of air carriers with respect to the international carriage of passengers, baggage and cargo. The United Kingdom signed the convention when it was adopted in 1999, but it has yet to come into force. Thirty countries must ratify it before it can come into force and, to date, 12 have done so. The conclusions adopted by the April 2000 Transport Council urged member states to be in a position to ratify the convention as soon as possible. My right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs presented the convention and an explanatory memorandum to Parliament in March 2001.

The convention modernises and consolidates the 1929 Warsaw convention and related instruments on the liability of air carriers to pay compensation for damages that arise from the international carriage by air of passengers, baggage and cargo. It removes existing financial limits for liability in relation to the death or injury of passengers and reflects Community legislation by establishing a two-tier regime. No-fault liability applies to the first, lower level of any claim, which is set at 100,000 special drawing rightsthe unit established by the International Monetary Fundor £85,000. Above that sum, the airline must show that the damage was not its fault, or that it was someone else's fault.

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On delays to passengers and the delay, loss or damage of baggage and cargo, the convention introduces an up-to-date regime for liability, including revised limits. It also simplifies documentary requirements to allow for electronic ticketing, and establishes a new jurisdiction under which passengers can make claims at the place of their principal and permanent residence.

The convention made provision for signature and ratification by organisations such as the European Community. The Community has signed the convention and will ratify it in accordance with a decision of the Council of Ministers. The United Kingdom now wants to be in a position to ratify the convention so that the updated provisions that were agreed in Montreal can apply internationally and, as far as possible, to non-international flights. To achieve that, two separate orders are needed.

The Carriage by Air Acts (Implementation of the Montreal Convention 1999) Order 2001 amends the Carriage by Air Act 1961. It introduces a new schedule, which sets out the convention for the purposes of international travel. It also makes consequential amendments to the Carriage by Air (Supplementary Provisions) Act 1962.

The Carriage by Air Acts (Application of Provisions) Order 2001 consolidates, with amendments, earlier orders that were made under section 10 of the Carriage by Air Act 1961, to incorporate certain provisions of the Montreal convention for domestic travel. The 1961 Act requires affirmative resolution by both Houses of Parliament, although the second order can only be made after the approval of the first.

In conclusion, we have notified the Foreign and Commonwealth Office and the Home Office of our intention to implement, with a view to ratification, the Montreal convention in the United Kingdom of Great Britain and Northern Ireland, so that separate action can be taken in respect of overseas territories. We have consulted the airlines and other interested parties, including the Ministry of Defence and Consignia, and have received broad support from all concerned. It is my view that the orders are compatible with the convention rights as defined in section 1 of the Human Rights Act 1998.

The Montreal convention represents a significant step forward in establishing a global agreement on air carrier liability. When it gains widespread acceptance, it will provide significantly better terms and conditions for passengers worldwide. I commend the orders to the Committee.

4.35 pm

Mr. Eric Pickles (Brentwood and Ongar): The Minister, admirably, explained two complex and important pieces of legislation in five minutes. The Opposition support the orders. After 70 years of technological change, it is amazing that we have only just arrived at the Montreal convention. It says something for the Warsaw convention that it stood the

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test of time. It was drawn up when flights were not as common as they are today and the level of technology was not what it is today.

Although the Minister covered every aspect of the orders more than adequately, the real meat is in articles 21 and 22 on page 17 of the Carriage by Air Acts (Application of Provisions) Order 2001. My understanding is that the Montreal convention seeks to establish uniform liability, but that it introduces, for the first time, a uniform, two-tier system of liability. The Minister admirably explained that with regard to special drawing rights and I shall not detain the Committee any further on that.

The orders relate to carriage, but also touch on matters such as passenger baggage and delays. The level of compensation set is admirable, although delayed passengers usually accept an overnight accommodation and subsistence allowance. It is quite rare for people to make claims, although they have the right to do so.

Given the events of 11 September, it might be a sensible use of the Committee's time for the Minister to tell us about the insurance back-up. Every month, the Government have sensibly and reasonably extended the guarantee for sums given in compensation greater than $50 million. It might be helpful for the Minister to set out how the provisions will be renewed. Will it be on done on a monthly or a six-monthly basis? It is probably easier to get that kind of information in a Committee such as this than it is on the Floor of the House, in the heat of debate.

The Montreal convention and the orders are welcome. We do not intend to oppose them, but it would be helpful if the Minister, who was very forthcoming in a recent Westminster Hall debatein which he said that he favoured offering some kind of help to our carrierswere to outline what he thinks the base plan should be.

4.39 pm

Mr. Don Foster (Bath): I, too, welcome you to the Chair, Mr. Beard. I join with the hon. Member for Brentwood and Ongar (Mr. Pickles) in thanking the Minister for an excellent exposition of the orders. I have but three questions.

First, is the Minister aware that when the orders were published on 3 May, a commitment was made that copies of the regulatory impact assessment relating to them would be placed in the Library, but that, as of last Thursday, copies of the assessment were not available? However, I commend the Department for ensuring that they were available on the web, from which I obtained a copy.

Secondly, following the question asked by the hon. Member for Brentwood and Ongar about insurance, the Minister will be aware that it is estimated that the liability for the loss or damage of a 20 kg bag will rise from about £300 to approximately £850. Has the Minister discussed with the airline industry and insurance organisations what impact they believe that increased liability might have?

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Thirdly, the Minister kindly gave us a rough ready-reckoner of how to convert SDRs to pounds. I am slightly confused, being but a man of simple brain, so will he explain how that relationship between SDR and the pound will change, given the effect of inflation? Will there be an annual upgrading, or is it a fixed relationship, regardless of inflation? What are the implications for different signatories to the convention?

The Liberal Democrats support both orders.

4.41 pm

Mr. Jamieson: I thank the hon. Members for Brentwood and Ongar and for Bath (Mr. Foster) for their complimentary remarks.

First, I will address the points made by the hon. Member for Bath. I shall inquire as to why the regulatory impact assessment was not in the Library. However, I am pleased to hear that modern technology assisted him, as that shows that we are e-friendly in the Department.

The hon. Member for Brentwood and Ongar may have pressed me on questions that fall outside the scope of the orders when he asked about insurance for airlines affected by 11 September. His comments referred to third-party insurance rather than baggage compensation or insurance for passengers. However, I would be happy to discuss the matter at some other time.

Mr. Pickles: I was not pressing the Minister but asking politely for information. That is different.

Mr. Jamieson: By politely asking me for information, the hon. Gentleman was trying to draw me down a path that I would have been prohibited from taking, under your watchful eye, Mr. Beard.

The hon. Member for Bath asked whether, during the consultation, airlines had objected to the new limits for cargo. They made no comment on those limits during the widespread consultation. As for SDR, when the hon. Gentleman scans his Financial Times to see how his shares are doing each morning, he will see it quoted with the other currencies. Article 23 of the Montreal convention provides for an updating of the liability. He seemed to be asking the teacher's question, as if he already knew the answer, but it was nice of him to test me out so that I could put the answer on the record. I think that that covers all his points.

Mr. Foster: While the Minister is thinking about SDRs, I should remind him that I asked also about insurance companies. The increase in the maximum payable amount from £300 to £850 will presumably have an impact on insurance premiums. What impact might that have on my insurance premium, for example, when I want to travel?

Mr. Jamieson: That point did not arise in the consultation, but I will try to tease some information out for the hon. Gentleman. I am sure that as he trots around the world on Liberal Democrat business, he will be anxious to know his insurance rights.

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The Treasury has extended until 23 January the scheme to which the hon. Member for Brentwood and Ongar referred, subject to approval by the European Commission.I am delighted that the Opposition support the orders and I am sure that my hon. Friends do, too.

Question put and agreed to.

Resolved,

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That the Committee has considered the Draft Carriage by Air Acts (Implementation of the Montreal Convention 1999) Order 2001.

DRAFT CARRIAGE BY AIR ACTS (APPLICATION OF PROVISIONS) ORDER 2001

Resolved,

That the Committee has considered the Draft Carriage by Air Acts (Application of Provisions) Order 2001.[Mr. Jamieson.]